(MENAFN- Kuwait News Agency (KUNA)) The International Monetary Fund (IMF) affirmed Wednesday that the Palestinian economy continues to be "dominated" by the public sector, expecting GDP growth to continue to slow in 2013.
In a report following a mission to the West Bank and Gaza Strip, the IMF said that "persistent Israeli controls and obstacles on internal movement, exports, and imports in the West Bank, as well as the virtual closure of Gaza, thwart the private sector." "Under these conditions, GDP growth is expected to continue to slow in 2013, to 4.5 (4) percent, with modest inflation of around 2.5 (2) percent," it indicated.
It added that given weak growth, "little progress is expected in reducing the unemployment rate, which currently stands at 24 percent," but that the banking system "appears healthy," although the finances of the Palestinian Authority (PA) "remain fragile." "We project an overall deficit before grants of USD 1.7 billion in 2013. Even if donor commitments for 2013 are fully met, a significant financing gap will remain," the Fund stressed.
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Aside from these near-term pressures, we remain concerned about the medium-term viability of the PA's finances. The PA has typically operated a large fiscal deficit financed partly by donor aid," the IMF stressed.
The Fund said that the PA "needs the continued support of the international community and cooperation of Israel, guided by the common objective of a more vibrant and robust Palestinian economy." It affirmed that "there is no substitute for a far-reaching relaxation of Israeli restrictions needed to unshackle the private sector and thereby boost growth and employment." "At the same time, the donor community needs to support the transition to viable public finances with stepped up aid based on multiyear commitments," the IMF noted
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